2025 (8) TMI 1574 - HC - Customs

Recognition of DRI as 'proper officers' under Section 28 results in setting aside orders and remand for fresh adjudication

The HC held that in light of the SC's subsequent law recognizing DRI officials as 'proper officers' under Section 28 of the Customs Act, the impugned ... Jurisdiction - power of proper officer to issue SCN - HELD THAT:- Similar appeals have already been considered by this Court in a number of matters. The decision on proper officer has now been rendered by the Supreme Court in Canon India (P) Ltd. v. Commr. of Customs, [2021 (3) TMI 384 - SUPREME COURT] wherein it was held that the Directorate of Revenue Intelligence (hereinafter, ‘DRI’) officials are not ‘proper officers’ under Section 28 of the Customs Act, 1962. Thereafter, a review against Canon-I was considered by the Supreme Court and the decision was passed in Commissioner of Customs vs. M/s. Canon India Pvt. Ltd. [2024 (11) TMI 391 - SUPREME COURT (LB)] where, it has been categorically held that the DRI officials would be ‘proper officers’ for purposes of Section 28 of the Customs Act, 1962. The impugned orders are set aside. The respective appeals before the CESTAT being C/53147/2015-CUS and C/53181/2015-CUS are restored to their original positions before the CESTAT. The CESTAT shall decide the respective appeals as listed earlier on merits. Appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether condonation of delay in filing customs appeals should be granted on the grounds and explanations presented. 2. Whether exemption from filing requirements should be allowed subject to exceptions in the applications before the Court. 3. Whether the question of whether Directorate of Revenue Intelligence (DRI) officers (and similarly situated officers) constitute 'proper officers' under Section 28 of the Customs Act, 1962 remains open for adjudication in the present appeals. 4. What is the appropriate procedural consequence where appellate or writ proceedings were remanded or stayed pending the outcome of the proper-officer issue, in light of subsequent authoritative decisions resolving that issue? ISSUE-WISE DETAILED ANALYSIS Issue 1 - Condonation of Delay in Filing Appeals Legal framework: The Court exercises its discretionary power to condone delay in filing appeals where sufficient cause is shown, applying ordinary principles of delay condonation in appellate practice. Precedent treatment: The judgment refers to routine judicial practice permitting condonation where explanations are persuasive; no novel precedent was relied upon. Interpretation and reasoning: The applications for condonation of delay contained reasons which the Court found sufficient. Given the material presented and absence of prejudice, the Court exercised discretion in favour of condonation. Ratio vs. Obiter: Ratio - the Court's allowance of condonation in these specific matters is a binding outcome for the parties; reasoning is case-specific and not laid down as a broad rule beyond established principles. Conclusions: The delay in filing the customs appeals is condoned; the related condonation applications are disposed of accordingly. Issue 2 - Applications for Exemption from Filing Requirements Legal framework: Courts may grant exemption from procedural filing requirements subject to just exceptions and conditions, balancing compliance with procedural rules and substantive justice. Precedent treatment: Applied established discretionary principles; no alteration to precedent. Interpretation and reasoning: The exemption applications were allowed subject to 'all just exceptions', indicating conditional relief while preserving the opposing party's rights and any necessary safeguards. Ratio vs. Obiter: Ratio - conditional grant of exemption in these instances; the phrase 'subject to all just exceptions' frames the nature of the relief as qualified. Conclusions: Exemption applications are allowed subject to just exceptions; those applications are disposed of. Issue 3 - Whether the 'Proper Officer' Question Remains Open Legal framework: Section 28 of the Customs Act empowers a 'proper officer' to issue show cause notices; jurisdictional competence of particular classes of officers (e.g., DRI, preventive, intelligence officers) to be treated as 'proper officers' is a determinative legal question affecting maintainability. Precedent treatment: The Court identifies two successive authoritative decisions by the apex court resolving the issue. The earlier decision held that DRI officers were not proper officers; a subsequent review decision clarified and overruled/reinterpreted that position, holding that DRI and similarly situated officers are proper officers for purposes of Section 28. The later decision provides detailed directions for disposal of proceedings pending on that question. Interpretation and reasoning: Given the apex court's enunciation in the final answer (as set out in the review outcome), the High Court concluded that the 'proper officer' issue is no longer open and should not be re-adjudicated in these appeals. The Court reasoned that where higher-court rulings have settled jurisdictional competence, lower courts and tribunals must apply that ruling and proceed to decide appeals on merits rather than remit or await further decisions. Ratio vs. Obiter: Ratio - the determination that the proper-officer question is conclusively resolved by the higher court and therefore not to be remanded in these matters; the Court's application of the higher-court directions to restore appeals for adjudication on merits is binding in the context of these appeals. Conclusions: The proper-officer question is settled by higher-court authority; the appeals cannot be adjourned or remanded merely to await that issue and must proceed on merits before the CESTAT in accordance with the higher court's directives. Issue 4 - Procedural Consequences for Appeals Previously Remanded or Stayed Pending the Proper-Officer Decision Legal framework: Where superior court rulings affect the maintainability of notices or the jurisdictional foundation of appeals, courts must follow the directions of the superior court on restoration, re-adjudication, time frames to prefer appeals, and re-listing for merits adjudication. Precedent treatment: The apex court's directions (as quoted and applied) prescribe specific steps for different procedural postures (writ petitions, appeals pending before apex court, orders-in-original challenged before high courts, appeals pending before CESTAT). The High Court follows these prescribed remedial steps. Interpretation and reasoning: Applying the higher court's scheme, this Court held that where CESTAT had remanded matters to await the higher court decision, those remand orders must be set aside and the appeals restored to CESTAT for determination on merits. The Court relied on the mandatory nature of the higher court's corrective regime which contemplates restoration and adjudication rather than further delay. Ratio vs. Obiter: Ratio - the Court set aside the impugned remand orders and restored the appeals to their original position before the CESTAT to be decided on merits; this is an operative disposition consistent with the superior court's directions. Conclusions: The impugned remand orders are set aside; the appeals are restored to CESTAT for adjudication on merits in accordance with higher-court directions. The Court provided for re-listing before the tribunal on a specified date. Cross-References and Miscellaneous Observations 1. Cross-reference: Issues 3 and 4 are interrelated - the settled status of the proper-officer question (Issue 3) directly dictates the remedial step of restoring appeals for merits adjudication (Issue 4). 2. The Court emphasized adherence to the higher court's specified procedural regime for dealing with matters where jurisdictional competence of the issuing officer was earlier challenged - including restoration, timelines for preferring appeals, and directions to tribunals and courts to proceed on merits. 3. Outcome summary (operative conclusions only): condonation and exemption applications allowed as specified; impugned remand orders set aside; appeals restored to the CESTAT to be decided on merits in accordance with higher-court directions; matters listed before the tribunal on the stated date.